The board of trustees of the National Association of Insurance and Financial Advisers voted on April 11 to recommend to its governing body that it give qualified support to legislation creating an optional federal charter.
The qualification is that NAIFA will work to ensure that any final legislation includes a provision giving its members the option to remain licensed and regulated at the state level, according to a letter to the NAIFA leadership from the trustees.
A final decision will come from the membership, which will be asked to vote on the recommendation at its annual meeting in San Diego in September.
The decision was prompted by the Treasury Department’s unveiling of a new blueprint for future financial regulation, as well as assurances by representatives of companies that they would support in final legislation provisions giving agents the option to remain state-regulated.
The concern of the trustees was that if a major life insurer elects to become federally chartered, it would insist that all of its agents be licensed at the federal level.
But, according to a top official at a major insurer who took part in the talks, the representatives of several large insurance companies as well as representatives of the American Council of Life Insurers assured the NAIFA leadership in several meetings that insurers who elected to become federally chartered would not force their agents to do the same.
Jack Dolan, a spokesman for the ACLI, a leader in the legislative battle to allow insurers to create an OFC, said the action of NAIFA trustees “is good news. An OFC offers producers and consumers many benefits.”
On the state-vs.-federal issue, Dolan added, “The bill, as written, permits insurance agents to sell for national companies on a state-issued license. We have pointed that out to agents groups to try to encourage their support for OFC.”
The decision did not sit well with another agent group, the Independent Insurance Agents and Brokers of America. Charles Symington, senior vice president, government affairs for the IIABA, said, “The NAIFA decision to move from neutrality to conditional support of optional federal regulation doesn’t come as a surprise to many in Washington D.C., however it is likely to be questioned by many life agents, particularly those agents who represent more than one insurance company.”
The IIABA and NAIFA have been working together on legislation that would recreate the National Association of Registered Agents and Brokers. The legislation, H.R. 5611, the NARAB Reform Act of 2008, was introduced last month.
It provides for streamlined non-resident licensing of insurance agents.